Pakistan achieved a current account surplus of $119 million in September 2024, according to data released by the State Bank of Pakistan (SBP) today. This marks the second consecutive month of surplus, following the $29 million surplus recorded in August 2024. The improvement is even more notable when compared to the $218 million deficit posted in September 2023, underscoring the country’s improving external account position.
Strong Cumulative Performance in FY25
On a cumulative basis, the current account deficit for the first three months of FY25 (July-September) shrank significantly to $98 million, marking a 92.1% improvement compared to the $1.24 billion deficit recorded during the same period in FY24. This reduction in the deficit highlights Pakistan’s growing efforts to strengthen its external balances amid ongoing economic challenges.
Export Growth in September
Pakistan’s export sector performed strongly in September 2024, with total exports rising by 10.1% to $3.3 billioncompared to $3 billion in September 2023. On a month-on-month basis, exports also grew by 6.7%, up from $3.09 billion in August. The increase in exports reflects improved demand for Pakistani goods in international markets, despite global economic uncertainties.
Import Rise and Trade Deficit
However, total imports also increased, rising by 15.0% to $5.57 billion in September 2024, compared to $4.85 billion in the same month last year. On a month-on-month basis, imports slightly declined by 0.6% from August’s figure. As a result of these trends, Pakistan’s trade deficit in goods and services widened by 22.9% year-on-year to $2.27 billion. Nonetheless, on a monthly basis, the trade deficit narrowed by 9.6%, suggesting some progress in curbing import levels.
Trade Deficit Worsens Cumulatively in FY25
In the first three months of FY25, the trade deficit worsened by 19.1%, rising to $7.42 billion compared to $6.23 billionduring the same period last fiscal year. While exports during this period grew by 7.4% to $9.4 billion, imports surged by 12.3% to $16.83 billion, widening the trade gap.
Surge in Workers’ Remittances
A major bright spot in Pakistan’s external account was the surge in workers’ remittances. In September 2024, remittances increased by 29.0%, reaching $2.85 billion, compared to $2.21 billion in September 2023. However, on a month-on-month basis, remittances decreased by 3.2%, down from $2.94 billion in August.
Cumulatively, remittances in the first three months of FY25 reached $8.79 billion, representing a substantial 38.8% increase over the $6.33 billion recorded during the same period in FY24. This robust growth in remittances has played a key role in offsetting the impact of the trade deficit on the overall current account balance.
Outlook
Pakistan’s strong performance in the current account, particularly driven by higher remittances and export growth, signals a positive trend for the country’s external finances. However, the rising import bill and widening trade deficit remain challenges that policymakers will need to address. With the global economic environment still uncertain, continued focus on export promotion and controlling imports will be crucial for sustaining the improvement in Pakistan’s external balances.
